With any big goal, you need a plan to achieve it. Good diversification comes from buying a selection of companies in different industries. On top of that you need a mix of stock categories.
If you want to not only match the average market return, but smash right through it, then you are going to need some high-growth stocks. Along with that, you should own several solid dividend payers to keep your average return high.
— For growth, one pick could be TPG Telecom Ltd (ASX: TPM). The telecommunications company is a big provider of high-speed broadband and operates its own internet network infrastructure in major cities. The company intends to be a direct competitor of the national broadband network in urban areas with its "fibre to the basement" (FTTB) plan to link up residences and businesses. Analysts forecast earnings growth over 20% annually in the next several years.
Magellan Financial Group Ltd (ASX: MFG) is a funds management company that had yet another incredible year with earnings up a remarkable 67% in financial year 2014. The company specialises in international equities and infrastructure like in the U.S. where the stock market has hit all-time highs recently. On top of that, the fund manager's success attracts more investor funds, which means more management fees. That kind of growth could be powering your portfolio as well.
— For dividend income, Suncorp Group Ltd (ASX: SUN) has a solid record of dividend growth over the last three years. Not only offering a huge 5.9% fully franked yield, the stock is forecast to see dividend payments rise over 10% annually in the next two years. The insurer also operates the fifth largest bank, which is on a stronger financial footing now. A more stable outlook gives shareholders confidence in the company's long-term growth.
Next, retail giant Wesfarmers Limited (ASX: WES) could be a good provider of solid dividends for many years. The company operates such stores as Coles supermarkets, Bunnings Warehouse, Officeworks, Target and K-mart. In addition, Wesfarmers is considering entering the financial services industry to maintain longer-term business and earnings growth rates. The stock pays a hefty 4.7% yield fully franked and is trading at 20 times earnings, which is near the high end of its past PE range. Investors already see the retailer as a good source of income and stable growth over the years to come.
